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We’ve Dropped Coverage of the Aerospace Supply Chain

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Image Source: Kevin Structure of the A&D Supplier Industry The aerospace supply chain will benefit from the multi-year backlogs at the airframe makers, Boeing and Airbus. Though the current upswing looks robust, commercial aerospace has historically been cyclical and remains influenced by airline profits, passenger traffic, credit-market health, and geopolitical conditions. Participants generally operate under contracts with significant long-term price concessions, so cost-containment remains critical. The strongest suppliers are those that have long-standing customer relationships, technical expertise, and state-of-the-art manufacturing facilities. We like the group. We’ve dropped coverage of the A&D Supplier Industry. 

United Tech’s Potential Bid For Goodrich To Start Wave Of Aerospace Acquisitions

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As we outlined previously in our long-term outlook on aerospace demand, the sector is the place to be and represents the largest weighting in the market-beating portfolio contained within our Best Ideas Newsletter, with Precision Castparts (PCP), Astronics (ATRO), and Edac Tech (EDAC) as core holdings. We outline our forecast for large commercial aircraft demand below:                       As shown above, the expected growth rate of aircraft deliveries during the next five years is truly remarkable. Both Airbus and Boeing are ramping up production of their workhorse A320 and 737 programs to thwart potential cancellations as competition heats up from global rivals — Bombardier, etc. — in the narrowbody market. Boeing has resumed a target of producing seven 777s a month (from … Read more

How to Play the Coming Upswing in Commercial Aerospace

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/272730-how-to-play-the-coming-upswing-in-commercial-aerospace In this, the follow up to our analysis of the narrowbody airplane market, let’s dive into just how robust the delivery upswing will be in commercial aerospace during the next few years and highlight a couple interesting, diversified ways to play the coming boom. We’ll also dive into one of the best aerospace names to own for the long haul, but leave open for Part III of this saga, an in-depth look at this firm’s valuation and the analysis of yet another intriguing play to capitalize on this multi-year cyclical upswing. First, let’s get a feel for what to expect from Boeing (BA) and Airbus during the next five years in terms of … Read more

Boeing Has Upside, Suppliers to Benefit From Boom

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With the first delivery and ramp up of Boeing’s (BA) revolutionary 787 Dreamliner, the reintroduction of its 747 platform, and rate increases on its workhorse 737 line, investors should expect a fairly significant ramp up in commercial aircraft deliveries, which remain supported by a massive backlog of unfulfilled orders. Impressively, Boeing’s commercial backlog of 3,400-plus planes is roughly 7x this year’s expected commercial revenue, in dollar terms. Needless to say, parts suppliers like Spirit Aerosystems (SPR), Precision Castparts (PCP), Rockwell Collins (COL), Goodrich (GR), Honeywell (HON), United Technologies (UTX) and a variety of others (including engine-makers like GE) will benefit from the coming boom in aerospace. Click to enlargeFurther, drawdowns in inventories, which have been a cumulative drag of over $15 billion … Read more